SHARP HOME

Friday, 15 March 2013

Three home purchasing mistakes to avoid

Buying a home is one of the most
exciting life experiences we go through—especially for first time
buyers. That said, it is also one of the decisions we make that will
have the most impact on our lives, so it is critical that adequate
thought and consideration go into discerning what the right purchase
may be. Your home will likely be the single greatest expense in your
life—not just in its actual cost, but in additional costs such as
insurance and maintenance. This is not to say that home purchasing
ought to be somber and joyless, but rather, to caution you against
purchasing mistakes that will have adverse effects on you and your
family in the long term. These mistakes include:

Overpaying for a home.
It's key here to remember that your home serves two primary
functions: it is a dwelling place, but it is also an investment.
While you'll want to have a checklist of criteria that that make your
dream home, and while you'll want to match that list as closely as
possible, be sure that your attachment to the criteria don't distract
you from the actual value of the property itself. Speaking with a
real estate agent about the various factors that contribute to the
final value of a home can help you to better assess whether the
asking price is a reasonable one. Additionally, multiple listings in
the same area offer a great opportunity for the kind of comparison
you want to do: if two (or more) houses in the same neighbourhood are
roughly matched in size and finish, and one of them is significantly
pricier than the other, this could be a red flag.

Buying beyond your means.
One of the worst mistakes you can make with the purchase of a new
home is to buy beyond what you can afford. Unfortunately, some agents
may facilitate that by deliberately showing you homes that are
“slightly” beyond the range you initially told them you were
interested in. If this happens, you need to be firm—avoid the
temptation altogether to ensure that you approach this with financial
responsibility. To really determine what you are willing to spend on
a home, consider the monthly payments you would be making with a
potential home, and compare them to what you are currently paying
(either in rent or mortgage). There will likely be at least some
difference; the trick here is assessing whether it's a difference you
can manage. Where will that additional $200 a month come from? Be
sure to write these things down—otherwise, you may be making
promises of frugality to yourself that you just aren't going to keep.

Buying in the wrong spot.
Remember that this is a decision you will be living with daily—the
where definitely matters. Certainly, the neighbourhoods that you can
purchase in are largely going to be determined by what you can
afford. For example, a Calgary homebuyer wouldn't expect to buy a a
four bedroom house in Mount Royal for $100 000. That said, whatever
your budget, there will be choices for you to make around location.
For example, you may be faced with the decision of whether to buy
small in order to be closer to the heart of the city, or whether to
live in the suburbs where the same money will get you more space.
Will the extra space be worth the longer commute you'll need to
make? Do you want to purchase that house right behind the hospital
where you're bound to hear sirens all day long? Or do you want to
find something similar in the same neighborhood that's only a couple
of blocks away from that? And so forth.